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Can managers be in a tip pool?
No. Since the Consolidated Appropriations Act of 2018, federal law bars employers, managers and supervisors from keeping any part of employees' tips, including through a tip pool. That's true whether or not you take a tip credit.
Who counts as a "manager or supervisor"?
The Department of Labor uses the duties test from the FLSA executive exemption. Someone generally counts if all three are true:
- Their main job is managing the business or a recognized department.
- They customarily direct the work of two or more full-time employees (or the equivalent).
- They can hire or fire, or their recommendations on hiring, firing or promotion carry particular weight.
Usually NOT a manager
Shift lead who mostly serves
- Runs the floor during a shift
- Can't hire or fire
- May share in the pool
Usually IS a manager
GM or kitchen manager
- Directs the staff
- Hires, fires and schedules
- Must stay out of the pool
Job titles don't decide it. Actual duties do.
The one exception
A manager may keep tips they receive directly from a customer for service they directly and solely provided, for example when they personally serve a table. They still can't take a share of the pool.
What it costs to get wrong
Employers who keep tips can owe all improperly kept tips, an equal amount in liquidated damages, and civil penalties per violation, plus attorney fees if the case goes to court.
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Keep reading
General information about U.S. federal law (FLSA, 29 U.S.C. §203(m)) and selected state and city rules as of October 2026. Not legal advice. Check your state labor department or an employment attorney before changing your pay practices.